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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (22000)	9/7/2005 8:00:14 AM
From: Wallace Rivers	Respond to of 78740

MKC may come back into the buy range today w/ multiple downgrades on poor guidance and write downs. Katrina was a factor, particularly in the Zatarain's product line. I was fortunate to trade the stock pretty well mid-July, and may jump back in again. Also looking at NUE as a relatively bland reconstruction play.

To: Madharry who wrote (22000)	9/7/2005 12:18:49 PM
From: Bob Rudd	Respond to of 78740

<<if you are in a flood zone fannie mae requires that you take out flood insurance>>That was certainly my impression...and more broadly, any hazard with significant risk would be offset by insurance to satisfy the mortgage lender. But when I heard that only 50% of homeowners had flood insurance...from multiple sources, this looked like uncovered risk because way more than 50% of homeowners have mortgages, IMO. That said, I'm no longer considering the banks as shorts: <<9/7/05 08:34 ET Hibernia Corp and COF renegotiate acquisition price (HIB) 31.40: HIB and Capital One (COF) announce they have renegotiated the purchase price of COF's acquisition of HIB, which is now valued at approx $5.0 bln, and represents a reduction in economic value of 9% relative to previous terms. Cos now expect the transaction will close in 4Q05. "Hibernia will continue to assess the expected impacts (of Katrina), including any expected near-term impact to third quarter earnings".>> The 9% Deal price adjustment on the COF-HIB merger disproves my hypothesis that La. banks teeter on insovency due to bad loans - COF is a well informed buyer with excellent access to the banks internal data. While a 9% haircut may under-reflect the impact, it nevertheless indicates it's far from catastrophic. I would sell these banks and FNM if I owned them, but they're not shorts unless COF is as looney as those Vikings they use in their ads.